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Congress Passes 2021 Appropriations Act, Containing COVID-19 Relief Bill

After months of debate and delay in providing additional economic relief in response to the COVID-19 pandemic, the Consolidated Appropriations Act, 2021 was signed into law December 27, 2020. In addition to funding the federal government for the 2021 fiscal year ending September 2021, the Act contains over $900 billion of additional Covid-19 pandemic stimulus funding and extends and amends several expiring tax provisions.

A summary of several of the key tax provisions:

- A second round of economic impact payments of $600 per individual taxpayer and $600 per qualifying child (subject to limitations on adjusted gross income)

- $300/week of unemployment insurance relief for 11 weeks

- $300 charitable contribution deduction for non-itemizers

- Extension of the 100%-of-AGI limit on cash contributions to a charity into 2021

- Opportunity to carry forward unused Flexible Spending Account balances in 2021

- Reduction in the hurdle for Medical Expense Deductions to ‘permanently’ return to 7.5%-of-AGI

- Elimination of the Tuition and Related Expenses deduction for education to be replaced with an expanded (and even more generous) Lifetime Learning Credit

- Modified and extended CARES ACT employee retention credit for employers

- Extended tax credit related to qualified paid sick and family leave under the Families First Coronavirus Response Act

- Full deductibility of expenses paid with forgiven PPP loan funds

- Ability to deduct 100% of the cost of business meals

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